Gold Slips as US Manufacturing PMI Beats Estimate

Gold has reversed directions on Tuesday, trading at a spot price of $1230.44 per ounce in the North American session. On the release front, ISM Manufacturing PMI came in at 49.5 points, within expectations. On Wednesday, the US releases ADP Non-Farm Employment Change, ahead of Nonfarm Payrolls on Friday.

Recent US housing numbers are raising concerns. Housing Starts and Building Applications both slipped in January, and New Home Sales and Pending Sales followed suit, missing expectations. Activity in the housing sector is closely monitored by analysts, as a decrease in home building can have a negative impact on other sectors of the economy. The markets will next shift focus to the employment front, starting with the ADP Nonfarm Payrolls. The estimate stands at 185 thousand, much lower than the previous release of 205 thousand.

The US economy has been grappling with a downturn in global demand, which has taken its toll on the manufacturing sector. A strong US dollar, which has posted broad gains in recent months, has only exacerbated the situation. However, recent manufacturing releases are raising hopes that the sector is stabilizing and that better days lie ahead. ISM Manufacturing PMI improved to 49. 5 points, a slight contraction, but above the estimate of 48.5 points. Late last week, durable goods reports were much stronger than expected. Core Durable Goods rose 1.8%, crushing the estimate of 0.2%. This marked the key indicator’s strongest showing since March 2014. Durable Goods Orders followed suit with a sharp rise of 4.9%, rebounding from the previous reading of -5.1%. This was stronger than the estimate of 3.0%.

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Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.

MarketPulse is a forex, commodities, and global indices analysis, and forex news site providing timely and accurate information on major economic trends, technical analysis, and worldwide events that impact different asset classes and investors.

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